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Sharing data is key to beating fraudsters

The Insurance Fraud Register, now live, is a vital step in reducing fraud across the industry. But at their first meeting of the year, Fraud Charter delegates heard how the lack of common standards to measure fraud remains a problem

Is insurance fraud increasing, or are we just getting better at detecting it?

There are many competing standards and statistics for insurance fraud, which results in an unclear picture of the state of fraud in the industry. Delegates at the breakfast meeting agreed that fraud is not going up at a dramatic rate. The general consensus was that there seems to be more types of fraud being detected rather than insurance fraud going up as a whole.

Insurance Fraud Bureau (IFB) director Ben Fletcher said: “It is a really difficult one to answer. From a ‘cash for crash’ perspective you see different trends and patterns. So it is difficult to say whether it has reduced because the nature of fraud is changing and it is difficult to compare on a like-for-like basis.”

Cunningham Lindsey head of fraud Christian Aplin added: “The numbers suggest it is going down, but there are areas where it is going up - for example, in commercial property and liabilities. Also, not everyone that is a compensator contributes to the figures and there are also non-insurer compensators.”

We say …The industry may need to collate the information on a more fraud-type specific level to get a better overview

Should there be a common set of insurance fraud metrics and standards?Delegates agreed there needed to be a more effective measurement for fraud, but highlighted the challenge of different fraud types emerging, as well as different insurers setting their own indicators.

DWF partner Paul Holmes said: “We need a more effective measurement, unless, for example, with claims fraud we are always going to put an estimate on it. One of the reasons the numbers are looking unclear is because we have movement into the commercial space, and we need a more effective measurement of that system.”

IFB director Ben Fletcher said organised fraud was becoming more difficult to measure because the indicators were not standard across the different companies.

Fico lead consultant Larry Jacobson also said that the industry needed to work on classifying fraud, and separating ‘soft’ and ‘hard’ fraud, so that it can report on it consistently.

We say …The industry still has some way to go before a common set of standards can be set because of government restrictions as well as insurer fears over sharing data and losing the competitive edge

Will the Insurance Fraud Register (IFR) be the magic bullet the industry has been searching for?After lengthy delays, the IFR is finally live. Although awareness about the register is growing, delegates agreed the IFR will only become fully effective when it is publicised alongside prosecutions made by the Insurance Fraud Enforcement Department/Insurance Fraud Bureau.

Law firm Carpenters partner Donna Scully said: “The IFR will be good for fraud teams who speak to claimants to let them know that, where fraud is suspected, they could appear on the register.”

The delegates heard how a major insurer was still waiting for its details to be loaded onto the IFR, but AXA global chief fraud control officer Richard Davies said the checks have to be rigorous to prevent incorrect details being placed on the system.

He said: “The IFB team is bringing people on board as quickly as it can, but it is not just a question of flicking a switch. The IFB has to be happy the insurer has the right systems and controls in place.”

We say …There needs to be more publicity about the IFR, as it will be an effective fraud deterrent at application stage

The IFR is clearly a major advance, but there are also other data-sharing initiatives. Will the IFR interact with them effectively?Conversations have already started in the industry over the sharing of IFR data with other industries owing to the nature of fraudsters playing across different parts of the market. Some data match testing has already started.

AXA global chief fraud control officer Richard Davies said: “I would never rule out the register being made available on a wider basis, but we have to be clear it is an [insurance] industry-owned system and we need to make it run efficiently, before it is opened out wider.

“The implication is that it will have value, so if we were able to get access to banking data it will probably help us make better underwriting decisions.”

Davies also said there were insurers who were not members of the IFB but were considering becoming so because of the register.

We say …The industry should get the system right before rolling it out to other bodies

Independent medical panels are being introduced to assess whiplash claims, but who should be accredited and how will this work?The industry is a step closer to introducing independent medical panels to try to curb spurious whiplash claims. But many questions remain about how accreditation should work and how to improve the quality of reports.

Association of Medical Reporting Organisations chairman Simon Margolis said: “It should be experts themselves doing the reports. We want to demonstrate that they have an understanding of their obligations and the appropriate medical knowledge.

“But you are asking clinicians to be fraud detectors and I am not sure if that is what they should be doing.”

The group agreed that auditing of the experts and a system where claimants’ testimonies would be cross-checked could prompt a change in behaviour.

DWF partner Paul Holmes added: “Although injuries can be subjective, the right questions are not being asked. The medical expert should say ‘I am not happy with this, I want to see the medical records’.”

We say …A change in behaviour on an individual level is required in order for the industry to see an improvement.